(PHOTO CREDITS: Courtesy THE SOUTHERN TIMES)
Windhoek The COVID-19 pandemic has left African governments at crossroads in terms of policy measures to stem the impact of the pandemic on their fragile economies, Tax Justice Network-Africa (TJNA) has said.
On one hand the countries are trying to consolidate their revenues to support emergency measures resulting from the pandemic; yet on the other hand they are under pressure to provide tax stimulus relief to businesses, private sector and citizens directly as a cushion from the inescapable economic downturn.
Moreover, the governments still require tax revenue to use for the interventions in response to the virus; and yet businesses are either shutting down or operating on low efficiency due to the lockdown and social distancing measures in place to fight the pandemic.
Many of the steps being undertaken in the fight against the spread of the pandemic are limiting African governments from collecting tax revenue from international trade.
In an interview, TJNA Executive Director Alvin Mosioma said many African countries are largely raw material exporters and with the current COVID-19 crisis, tax revenue on exports is adversely affected.
Currently most commercial flights are on ban and some borders are closed due to the pandemic.
Mosioma said the crisis is also worsened by the suffocating tourism sector which is triggered by the grounding of international tourists due to COVID-19 measures. Domestic tourism in Africa does not make a significant contribution to GDP’s as compared to international.
“The majority of African workers are in the informal economy, which means that many are not benefitting from the corporate and personal income tax reliefs being provided by governments. The tax revenue systems in many countries had been compromised by the weakened capacity for tax collection. They have been immensely affected by the tax incentives that were put in place to attract investment, weak policies and outdated laws,” said Mosioma.
He claimed that the COVID-19 crisis has exposed the structural issues that have been in existence even before the virus.
